The Stock Market is Not Your Friend

Dean Baker

 April 21, 2026

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Photo by Bradley Andrews

Imagine celebrating the price of corn or wheat hitting a record high. That would make perfect sense if you grew corn or wheat, but it’s hard to see why anyone else would be celebrating. This is the same story with the stock market, even though shareholders are a somewhat larger share of the population than corn or wheat farmers. But the basic principle is the same.

In principle, the stock market reflects expectations of future after-tax corporate profits. Expected profits can rise because the economy is expected to grow more rapidly, and corporations will get their share as profits rise along with the economy. But that has not been the case over the last quarter-century.

The after-tax profit share of national income has nearly doubled, going from an average of 6.6 percent in the 1990s to 12.5 percent in the last quarter of 2025. This explains most of the soaring stock market over this period, although the ratio of stock prices to corporate earnings is also near a record high, leading many of us to argue that we have a stock bubble.

It is hard to see why the bulk of the population, who own little or no stock, should be celebrating the redistribution from wages to profits that provides most of the basis for the run-up in stock prices in the last quarter-century. (It’s worth noting that there was massive upward redistribution from 1980 to 2000, but that was mostly within the wage structure, with money going from ordinary workers to corporate executives, STEM workers, and Wall Street types.)

In the Federal Reserve Board’s most recent Survey of Consumer Finance, just 34 percent of households in the bottom half of the income distribution owned any stock at all, either directly or indirectly in a mutual fund. For this group, the median holding was just $12,600. Among the upper-middle-income group, from the 50th to the 89th percentile of the income distribution, 78 percent owned stock. For this group, the median holding was $53,200.

This survey was conducted in 2022, so raise these sums by around 25 percent to account for the rise in the market. That still only gives a median holding of $15,800 for the stockholders in the bottom half of the income distribution and $67,500 for the upper-middle-income group.

Compare this with the wage loss associated with any possible stock gains for the bulk of the population. According to the Economic Policy Institute, the average hourly wage for workers at the 30th percentile of the wage distribution was $19.70 an hour. That would come to a bit over $39,000, a year assuming a 2000-hour work-year. Health care, pensions, and other non-wage benefits add a bit over 20 percent to this sum, bringing annual compensation to around $43,000 for the 30thpercentile worker.

The 5.9 percentage point increase in the profit share in the last quarter century would be sufficient to raise wage income by 8.8 percent. For the 30th percentile worker, that would come to $3,800 each year. Compare that to the $15,800 median holding for the one-third that own any stock at all. Should this half of the population be celebrating higher stock prices?

Looking at the upper middle group, the hourly wage at the 70th percentile is $36.80. That comes to $73,600 for a full work-year. Adding in 20 percent for non-wage benefits gets them to $88,300. An 8.8 percent pay raise, from reversing the redistribution to profits, would mean $7,800 a year. That’s a bit of a closer call for the 78 percent that own stock. But with a median holding for this group of $53,200, the vast majority would be much better off with a bigger paycheck and a 50 percent decline in the stock market.

The arithmetic on this is pretty straightforward; the vast majority of people in the country would have been far better off without the redistribution from wages to profits and a much lower stock market. Asking them to celebrate the rise in the market is similar to asking the wheat and corn eaters among us to celebrate the rise in the prices of these grains.

There is one other point worth noting in this respect. As I said, the price-to-earnings ratios in the stock market are near record highs. That is also not something most of us have cause to celebrate.

The run-up in house prices has far exceeded the run-up in rents over the last decade. This is likely at least in part attributable to people with big gains in the stock market bidding up house prices. Many of the big winners in the market have two or three homes.

Are you happy about high house prices? It is pretty incredible that many of the same folks who yap about affordability will also praise a run-up in stock prices. So much for consistency.

Anyhow, it really would be good if folks talking about the stock market did so with a little self-awareness. Most of the people we hear talking in the media probably have a good chunk of money in the stock market, and for that reason have cause to celebrate higher stock prices, but that is not the story for most of the country.

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

Countdown to Recession?

David Rosen

 April 21, 2026

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Photo by Annie Spratt

Donald Trump’s second term as president is turning out to be a disaster.  His Israel-driven “war” against Iran is failing, with the current “peace” effort a sham.  His domestic economic policies — including tax cuts to corporations and the rich, roller-coaster tariffs and support for fossil fuels — have made the U.S. more unaffordable for an ever-increasing number of Americans.  Are his policies setting the stage for a bitter economic recession?

Warnings about a possible recession are growing. According to Reuters, “Under the IMF’s [International Monetary Fund] worst-case outlook, the global economy teeters on the brink of recession, with oil prices averaging $110 a barrel in 2026 and $125 in 2027.”  Goldman Sachs is sounding an alarm, warning that the U.S. economy is slipping and the war in Iran is making it worse. The bank recently raised its 12-month recession probability to 25 percent.  And Moody’s pegged a likely U.S. recession at 49 percent before the Iran war, but with its resulting high oil prices the likelihood of a recession crossed 50 percent.

Most ominous, EuroNews warns, “Every US recession since World War II, apart from the Covid-19 pandemic downturn, was preceded by a spike in oil prices.”

According to the IMF, a recession is “a sustained period when economic output falls and unemployment rises.” It notes, “recessions have occurred in advanced economies several times in the past four decades—the mid-1970s, early 1980s, early 1990s, and early 2000s.” The U.S.’s National Bureau of Economic Research (NBER) defines recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”  This decline is determined by three criteria — depth, diffusion and duration – set against a variety of monthly economic indicators including “income, employment, consumption sales, and industrial production.”  It notes that the U.S.’s most recent recession was from March to April 2020.

A look at some of the “indicators” is revealing, including consumer confidence, new job creation, inflation and the ever-growing wealth gap.

Most disturbing, the University of Michigan’s “Survey of Consumers” reveals just how worried Americans are about a possible recession.  It notes that “Consumer Sentiment” in April 2025 it stood at 52.2 and rose to 53.3 in March 2026, only to fall to 47.6 in April 2026.  It adds:

“Consumer sentiment sank about 11% this month, extending a decline that began with the start of the Iran conflict, and is currently about 9% below a year ago. Demographic groups across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall.”

It adds, “Assessments of personal finances declined about 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values.”

“Affordability” has become a key domestic issue in 2026 and, as The New York Times put it, “The difficulty of purchasing a ticket to the middle class has created a sense that the economy isn’t working, even when the economy isn’t so bad by usual measures like growth or unemployment.”  When Trump took office in 2025, affordability was a key concern of his administration, but since he launched the Iran war, it has essentially disappeared.

Josh Bivens, of the Economic Policy Institute, is pretty pessimistic. “Trump policies really are making a recession more likely and even if a recession does not occur, these policies will harm typical families’ ability to afford what they need.”  He added:

“This affordability crunch will happen for two reasons: Trump policies will hamstring the economy’s ability to supply goods and services, and these policies aim to increase inequality by transferring income from the bottom and middle toward the top. Sometimes this affordability crunch will manifest as higher prices or faster inflation, but it is more likely to appear as slower wage growth and the rollback of public supports for households.”

He warned, “But its root is always and everywhere poor economic choices, including prioritizing the interests of the rich and corporations over the concerns of typical American families.”

The problem of affordability has come at a time when the cost of gasoline is skyrocketing and increasing for other goods and services.  This reflects the deeper structural problem of a consumer’s reduction of purchasing power, accompanied by an increase in the inflation rate.  The U.S. Bureau of Labor Statistics (BLS) reports that the consumer price index rose 3.3 percent year-over-year in March 2026, up from 2.4 percent in February. It adds, “On a monthly basis, the all items index increased 0.9 percent, seasonally adjusted, in March 2026, after rising 0.3 percent in February and 0.2 percent in January.”

Compounding this situation, the BLS finds for March 2026 that “Both the unemployment rate, at 4.3 percent, and the number of unemployed people, at 7.2 million, changed little in March. These measures also changed little over the year.”  However, it notes:

“The number of long-term unemployed (those jobless for 27 weeks or more) changed little at 1.8 million in March but is up by 322,000 over the year. The long-term unemployed accounted for 25.4 percent of all unemployed people in March.”

And adds:

“Both the labor force participation rate, at 61.9 percent, and the employment-population ratio, at 59.2 percent, changed little in March. These measures also showed little change over the year, after accounting for annual population control adjustments.”

Ominously, it goes further, stating: “Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force increased by 325,000 in March to 1.9 million. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. “

Perhaps most worrisome, on January 31, 2025, the Federal Reserve of Minneapolis issued a reportthat cautioned: “Since the 1980s, the US has experienced not only a steady increase in income inequality, but also a contemporaneous rise in residential segregation by income.”

Mark Zandi, chief economist at Moody’s Analytics, goes further, noted, “Household wealth is highly concentrated and becoming steadily more concentrated.”  The top 1% of households owned 31.7% of all U.S. wealth in the third quarter of 2025, the highest share on record since the Federal Reserve began tracking household wealth in 1989. Collectively, the wealthiest 1% held about $55 trillion in assets in the third quarter of 2025 — roughly equal to the wealth held by the bottom 90% of Americans combined.

Robert Reich, professor emeritus, University of California, Berkeley, is even more cautious. “Donald Trump talks a lot about the working class, his MAGA base is primarily working class, but if you look at the data, the working class is doing very badly in the second Trump administration.”  Reminding readers, “The real growth in the second Trump administration has been in corporate profits and in the wealth of the people at the top.”

Trump may pull off a peace agreement with Iran (along with Israel-Lebanon) that could resume oil shipments and lower the price of oil.  But the war’s long-term consequences are all too often overlooked.

Laleh Khalili, a professor of Gulf Studies at University of Exeter, recently appeared on Democracy Now! where she reminded viewers, “the effect of what the war is going to be is going to actually be felt even more strongly in the coming weeks ….” She identified “transportation costs are going to be higher, so food prices are going to be higher, when people’s MRIs are going to be scheduled out by six months or some such, when semiconductor manufacturing is going to be affected.”  And added, “This is going to be quite significant.”

Going further, Khalili notes that the long-term consequences of the Iran war will involve “incredible shortage of aluminum,” “Helium reserves are down massively,” and “the question of insurance.”  And she warns, “this combination of both the market, the logic of commercial risk, on the one hand, but, on the other hand, the fact that Iran poses a credible threat to ships in the Strait of Hormuz, in the Gulf of Oman, and both directly and via its allies and Ansar Allah in the Red Sea, means that I actually think that the crisis is only going to get kind of more horrific before it gets any better.”

It’s only six months until the 2026 Congressional elections and it’s likely that the Democrats will take back the House.  This may put some restrictions on Trump’s – and, more so, Russell Vought, director of the Office of Management & Budget and lead author of Heritage’s “Project 2025” – efforts to shrink the federal workforce and cut social benefits.  And even if Trump secures a workable peace agreement, it remains to be seen if he – or the Republicans – can address the challenges of affordability and prevent a recession.

David Rosen is the author of Sex, Sin & Subversion:  The Transformation of 1950s New York’s Forbidden into America’s New Normal (Skyhorse, 2015).  He can be reached at drosennyc@verizon.net; check out www.DavidRosenWrites.com.

Trump: An Alternative Hypothesis

Thomas Knapp

April 21, 2026



Photograph by Nathaniel St. Clair

I don’t care much for politicians and their works. Political government is a stupid and evil way of doing things. It makes us all less happy, less healthy, less prosperous, and less safe than we’d be if we abandoned it for voluntary means of living together.

Nonetheless, I occasionally try to “give credit where credit is due” when a politician departs, for even a moment, from evil and stupidity. At other times I seek the most charitable explanations I can find for that politician’s actions. This is one of those latter times, and the question at hand, as you might expect is:

What is it with Donald Trump?

First, a note: I occasionally receive hate mail and comments opining that I suffer from “Trump Derangement Syndrome” and have never levied the same criticisms, for the same types of actions, against other presidents.

That’s not true, and you don’t have to take my word for it. I’ve been writing political commentary since the 1980s, and you can easily find almost all of that commentary from the early 1990s on with a quick search engine query. I’ve been, on balance, at least as critical of Bill Clinton, George W. Bush, Barack Obama, and Joe Biden as I’ve ever been of Trump.

I’ve even said some nice things about Trump for, among other things, talking with the North Koreans, feinting toward US withdrawal from Syria, negotiating the US surrender in Afghanistan, advocating for an end to taxing tips, etc. He hasn’t always followed through, but he’s sometimes come up with good ideas.

There’s something those good ideas have in common, and it occurs to me that those things may be of a piece with my “most charitable explanation” for ideas that weren’t as good.

Some commentators look at Trump and the MAGA-dominated Republican Party and conclude that “the chaos is the point.” That is, the purpose of some of the weirder and wilder actions of Trump’s administration is to build an omnipotent totalitarian state by sowing fear, discord, and confusion — to keep their opponents on perpetual tenterhooks, disorganized and unable to effectively respond, as new authoritarian measures roll out.

But what if it’s not that?

In the mid-1990s, Clayton M. Christensen introduced the idea of “disruptive innovation” into the public lexicon. By the early 2000s, nearly every tech start-up touted itself as “disruptive,” in a good way although not usually in precisely the way Christensen seems to have intended.

Around that time, Mark Zuckerberg coined a motto for how Facebook approached building itself as a social media platform. “Move fast and break things.” In other words, if you have an idea that seems like it might produce really good results, pull the trigger and see what happens.

As goes biz buzz, so goes political thinking. Quoth the late Scott Adams:

“What Trump does is he shakes the box. He just wants to see where the pieces land, because wherever they land is a different situation than the one he’s in.”

Since the 1930s, with their penchant for technocracy, American politicians and bureaucrats have generally been disruption-averse. They prefer to tweak the system, messing around at its edges with minor “improvements.”

Trump prefers “disruptive innovation.” While he’s unwilling to attack the central problem — political government itself — he’s big on “disruptive” experimentation, both in general (consider, for example, the DOGE episode) and when he’s in a situation that seems to call for distraction (“Epstein? Who’s that? Hey, look, Iran!”).

While I’m usually not ecstatic with the results, “shaking the box” may be a better explanation than “he’s more stupid and evil than previous presidents.”


Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.